18.

LEARNING OBJECTIVES
DESCRIBE FEATURES OF ENTERPRISE
COMPUTING & INDUSTRIAL NETWORKS
EXPLAIN BUSINESS & TECHNOLOGY
DRIVERS
IDENTIFY ELEMENTS & DECISIONS IN
BUILDING INFORMATION
TECHNOLOGY
INFRASTRUCTURE
*
18.2

LEARNING OBJECTIVES
COMPARE VISION OF ENTERPRISE
SYSTEMS AND INDUSTRIAL NETWORKS
WITH MANAGEMENT REALITY
PLAN DEVELOPMENT OF ENTERPRISE
SYSTEMS AND INDUSTRIAL NETWORKS
*

18.3

MANAGEMENT CHALLENGES
MANAGING INFORMATION TECHNOLOGY
(IT) INFRASTRUCTURE & ARCHITECTURE:
ENTERPRISE COMPUTING
MANAGING THE NEW IT INFRASTRUCTURE
ENTERPRISE SYSTEMS
INDUSTRIAL NETWORKS & EXTENDED
ENTERPRISE SYSTEMS
*
18.4

SAP
German:
SYSTEME, ANWENDUNGEN,
PRODUKTE IN DER
DATENVERARBEITUNG
English:
SYSTEMS, APPLICATIONS, PRODUCTS IN DATA
PROCESSING
Pronounced S A P. Like you say: I B M
18.5

ENTERPRISE RESOURCE
PLANNING (ERP):
Collection of software programs
which ties enterprises (finance,
manufacturing, sales, HR, ...) into a
cohesive database.
This software also provides tools to
analyze data to plan production,
forecast sales, analyze quality,
*
18.6

BUSINESS VALUE CHAIN

INTERDEPENDENT FUNCTIONS DEAL WITH
VENDOR & CUSTOMER BUSINESS
PROCESSES
TYPICAL CHAIN:

INBOUND LOGISTICS
MANUFACTURING
FINANCE
MARKETING & SALES
SUPPORT

*
18.7

TRADITIONAL VIEW OF
SYSTEMS
APPLICATION SPECIFIC: Separate
systems support discrete business
processes, discrete segments of
business value chain
FIRM BOUNDARIES: Vendors &
customers rarely considered,
impermeable, tightly controlled
*
18.8

ENTERPRISE BUSINESS
SYSTEMS
VENDORS

INBOUND MANUFACTURING
LOGISTICS

MARKETING
FINANCE
AND
SUPPORT
SALES

SINGLE SOFTWARE &

HARDWARE SYSTEM
PERMEABLE BOUNDARIES
18.9

CUSTOMERS

ENTERPRISE BUSINESS
SYSTEMS
ENTERPRISE COMPUTING: Firmwide
integration of key business process
information, processes shared with multiple
firms
INFORMATION TECHNOLOGY (IT)
IT INVESTMENT PORTFOLIO
IT & PUBLIC INFRASTRUCTURES
BUSINESS LOGIC

*
18.10

INFORMATION TECHNOLOGY (IT)

IT INVESTMENT PORTFOLIO: Firms
total capital investment on IT
IT INFRASTRUCTURE: List of hardware,
software, telecommunications, people
related to IT
PUBLIC INFRASTRUCTURE: External
links to firms IT infrastructure
*
18.11

INFORMATION TECHNOLOGY (IT)

BUSINESS LOGIC: Specifications of
model & processes to maximize firms
revenue
IT ARCHITECTURE: Applications,
relationship to firms business logic,
descriptions of systems that support
business model & processes
*
18.12

INDUSTRIAL NETWORKS &

TRANSENTERPRISE SYSTEMS
INDUSTRIAL NETWORKS: Networks
linking systems of multiple firms,
also called EXTENDED
ENTERPRISES
BUSINESS DRIVERS
TECHNOLOGY DRIVERS
*
18.13

BUSINESS DRIVERS
MARKETS: Globalization, information
intensity reduce margins
INDUSTRY: Mergers, acquisitions,
consolidations increase economies of
scale, competition
FIRMS & ORGANIZATIONS: Process
redesign highlight need for enterprise-wide
IT
*
18.14

BUSINESS DRIVERS
PRODUCTS & SERVICES: Growth of info
capabilities shortens product life cycle
MANAGEMENT PROCESS THINKING: Shift
to view firm as integrated processes,
industry-based views of cooperation,
alliance
MANAGEMENT STRATEGY: Belief that IT
investment leads to valuable knowledge
*
18.15

TECHNOLOGY DRIVERS

RELATIONAL DATABASE TECHNOLOGY

REDUCTION IN STORAGE COSTS
EXPANDED PUBLIC INFRASTRUCTURE
DEPLOYMENT OF CLIENT/SERVER
EVOLUTION OF DESKTOP COMPUTING
ENTERPRISE SOFTWARE: Standardized
applications in integrated environment
*

18.16

MODEL FOR PLANNING

ENTERPRISE SYSTEMS
FIRMS MARKET ENVIRONMENT
FIRM STRATEGY AND GOVERNANCE
BUSINESS MODEL
BUSINESS PROCESSES
FIRM IT ARCHITECTURE
FIRM IT INFRASTRUCTURE

18.17

MANAGING THE NEW IT

INFRASTRUCTURE

ELEMENTS OF THE INFRASTRUCTURE

KEY INFRASTRUCTURE DECISIONS
GOVERNANCE
MERGERS & ACQUISITIONS
*

18.18

ELEMENTS OF THE NEW

INFRASTRUCTURE
RELIANCE ON NETWORKED DESKTOP
& PERSONAL DEVICE COMPUTING
RISE OF THE INTERNET
GROWING PUBLIC INFRASTRUCTURE
RELIANCE ON THIRD PARTIES
*

18.19

KEY INFRASTRUCTURE DECISIONS

PROCESSORS
SOFTWARE ENVIRONMENT
SHARED APPLICATIONS
TELECOMMUNICATIONS
*

18.20

GOVERNANCE: CONNECTING
INFRASTRUCTURE TO STRATEGY
TRADITIONAL INFRASTRUCTURE, ARCHITECTURE
GREW HAPHAZARDLY
REQUIRES 4 LEVELS OF INVOLVEMENT
STRATEGIC: CEO, CIO, top managers
OPERATIONAL: Set functional specs, establish
budget
BUSINESS, REGIONAL UNITS: Plan to allocate
funds
FUNCTIONS: Detail plans & implement

*
18.21

MERGERS & ACQUISITIONS

ECONOMIES OF SCALE, SCOPE,
KNOWLEDGE, TIME
CUT COSTS, REDUCE RISKS
POTENTIAL PROBLEMS:
Integrating diverse systems
Merged entity cannot execute new processes
Loss of customers

*
18.22

MERGERS & ACQUISITIONS

FOUR STAGES:
1. STRATEGIC EXPLORATION: Identify
firms with strong IT assets, knowledge
bases, potential for rapid integration
2. VALUATION: Identify integration costs,
estimate economies of scale, scope,
knowledge, time
*
18.23

MERGERS & ACQUISITIONS

FOUR STAGES:
3. PURCHASE: Establish transition team,
validate costs & benefits, establish IT
transition teams
4. TRANSITION: Activate systems
coordinating group, search for best
systems, reduce redundancies
*
18.24

ENTERPRISE SYSTEMS
THE VISION
THE REALITY
*

18.25

ENTERPRISE SYSTEMS:
THE VISION
STRUCTURE & ORGANIZATION: One
organization
MANAGEMENT: Firm-wide Knowledge-based
management processes
TECHNOLOGY: Totally unified information
system
BUSINESS: Customer- driven business
processes
*
18.26

ENTERPRISE SYSTEMS:
THE REALITY

DAUNTING IMPLEMENTATION
UNREALISTIC COST / BENEFIT ANALYSIS
NOT ACHIEVING ROBUSTNESS
TRAPPED IN DIGITAL CONCRETE: Older systems
hard, expensive to change
DIFFICULT TO ATTAIN
INTEROPERABILITY
DIFFICULT TO REALIZE
STRATEGIC VALUE
*
18.27

INDUSTRIAL NETWORKS &

EXTENDED ENTERPRISE SYSTEMS

THE VISION
THE REALITY
*

18.28

INDUSTRIAL NETWORKS &

EXTENDED ENTERPRISE SYSTEMS
THE VISION:
STRUCTURE: From marketplace to
value web
VALUE WEB: COLLECTION OF FIRMS
ACTING TOGETHER IN AN
INDUSTRIAL VALUE CHAIN
COORDINATED BY NETWORKS
*
18.29

INDUSTRIAL NETWORKS
COMPETING
FIRMS

FIRM 1

FIRM 2

FIRM 3
INDUSTRY
VALUE
CHAIN

INDUSTRIAL NETWORKS

COMPETING
VENDORS

18.30

VENDOR
1

VENDOR
2

VENDOR
3

INDUSTRIAL NETWORKS &

EXTENDED ENTERPRISE SYSTEMS
THE REALITY:
CHOOSING BOUNDARY REGIME
SHARING COSTS, RETAINING
BENEFITS
VULNERABILITY & DEPENDENCE
*
18.31

INDUSTRIAL NETWORKS &

EXTENDED ENTERPRISE SYSTEMS
THE STEPS:
1. KNOW WHERE YOU ARE: Relative to
technology, competition
2. KNOW WHO YOU ARE, WHERE YOU
WANT TO BE
3. DEVISE LONG TERM PLAN (FIVE YEARS):
Dont redesign everything at once
*
18.32

INDUSTRIAL NETWORKS &

EXTENDED ENTERPRISE SYSTEMS
THE STEPS:
4. SUCCESS WILL REQUIRE SIGNIFICANT
CULTURAL, MANAGERIAL PROCESS
CHANGE
5. RETRAIN MANAGERS, EMPLOYEES
6. DEVELOP INCENTIVE SYSTEMS TO
SUPPORT NEW INFORMATION
ENVIRONMENTS
*
18.33

Connect to the INTERNET

PRESS LEFT MOUSE BUTTON ON ICON TO

CONNECT TO THE LAUDON & LAUDON
WEB SITE FOR MORE INFORMATION IN
THIS CHAPTER
18.34

18.35